The Fresno County Employees’ Retirement Association has made a decision in its search for a distressed private equity manager.
Angelo, Gordon & Co. will receive a $30 million pledge from the limited partner for AG Capital Recovery Partners VII. Angelo, Gordon typically invests in secured and other senior debt instruments of troubled companies, which, because of their priority in a company’s capital structure, are relatively unaffected by swings in the equity markets, especially compared with more junior, higher risk/reward securities such as subordinated debt. Angelo, Gordon actively manages its distressed investments, often becoming an active participant in a restructuring to maximize the value of its investment. The firm is targeting $2 billion for the core fund, plus $1 billion in reserve capital. The management fee is 1.5 percent of committed capital, although the fee drops down to 1.25 percent for commitments of $250 million or more.
The candidates interviewed for the distressed private equity mandate were funds-of-funds managers Drum Capital Management and Portfolio Advisors. The direct distressed investment options were Angelo, Gordon and DDJ Capital Management. Consultant Wurts & Associates also recommended HarbourVest Partners and Oaktree Capital Management, although they were not interviewed.
The $2 billion pension fund’s private equity commitments total $310 million across 14 partnerships. The program mostly consists of buyout funds, but also includes venture capital and special situations funds. The county’s actual private equity allocation stood at 9.8 percent as of March 31, with a policy target of 11 percent.